Pfizer to continue with manufacturing cuts

By Gareth Macdonald

- Last updated on GMT

Related tags: Pfizer

US drug giant Pfizer plans to close or sell off an additional 13
manufacturing facilities as part of an effort to cut its number of
production plants to 44 by the end of 2009.

The company, which reported an 18 per cent drop in income and a 5 per cent decline in revenue for the first quarter, has been scaling down production capacity for several years as part of a $2bn cost reduction program. The round of cuts, which were announced at Pfizer's first quarter results presentation by chief financial officer Frank D'Amelio, will also see the firm decommission four of the six R&D facilities that it earmarked for closure last year.​D'Amelio explained that Pfizer was able to employ such an approach because it has "a wide array of outsourcing opportunities at various stages of implementation​." He added that "manufacturing, logistics, finance, facilities, legal and IT are among the functions contributing to the financial and operational benefits of the strategy​." Pfizer's plan will be a further boost for the contract manufacturing and contract research sectors, which have both benefited from "big pharma's" move towards outsourcing. In recent years, global drug firms such as AstraZeneca, GlaxoSmithKline and Novartis have all increased their use of CMOs to help reduce production costs and improve margins. ​ The move will also provide opportunities for other pharmaceutical companies wishing to expand. Earlier this year, Icelandic generics firm Actavis snapped up Pfizer's manufacturing facility in Nerviano, Italy, while last December PharmEng's subsidiary Keata Pharma bought the drug major's production plant in Arnprior, Canada. Exubera and torcetrapib ​ The manufacturing cuts are a continuation of Pfizer's extensive program of cost reductions. Last year for example, production sites in New York, Nebraska and Germany were shut and sold off as the firm made good on its plan to shed several thousand jobs and generally tighten its belt. Prior to that, the clinical failure of its putative Lipitor replacement, torcetrapib, led the company to close its manufacturing plant in Ringaskiddy, Ireland, and divest similar facilities in Little Island and Loughbeg in County Cork. More recently Pfizer's decision to drop the inhaled diabetes drug Exubera has left the firm with considerable overcapacity. Mr D'Amelio specified that two of the insulin production facilities that the firm had set up to support Exubera would be decommissioned as part of the cut-backs. He went on to say that the firm had fully-recognized the cost reduction benefits resulting from its 2007 efforts to reduce production capacity and added that similar activities this year were beginning to pay dividends. The announcement comes at what is widely acknowledged to be a difficult time for Pfizer. First quarter pharmaceutical revenue fell 6 per cent to $10.9b as sales of the firm's lead product Lipitor (atorvastatin) declined 7 per cent to $3.1bn. Despite this, Pfizer chief executive officer Jeffrey Kindler said the results were "in line with our expectations" and that the company is continuing to make progress with its global cost-cutting moves.

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